Saudi Arabia, the world’s biggest oil exporter, won’t boost output to
capacity and flood the market, the kingdom’s Energy Minister Khalid
Al-Falih said as OPEC members plan to meet next month to discuss ways to
stabilize crude prices.
Saudi Arabia isn’t concerned about global
demand in spite of a drop in prices and a slower economy, Al-Falih said
in an interview with Al-Arabiya television. The country is able to pump
as much as 12.5 million barrels a day of oil, he said in comments
broadcast during an official visit to buyers in Asia, its biggest
market, including China.
Khalid Al-Falih
Photographer: Akos Stiller/Bloomberg
“The
market is now saturated with stored crude at beyond usual levels and we
don’t see in the near future a need for the kingdom to reach its
maximum capacity,” Al-Falih said. Demand in China is “very healthy” and
consumption in India is “very good,” he said. Saudi domestic use is
rising due to two new refineries in Yanbu and Jubail, which have raised
consumption by a combined 800,000 barrels a day, Al-Falih said.
Record Output
Saudi
Arabia is producing near record levels as it tries to preserve market
share in the face of a worldwide glut. Increased oil supply, including
from U.S. shale drillers, triggered a drop in prices of more than 50
percent since their 2014 peak. Saudi Arabia plans to hold informal talks
on stabilizing prices with other members of the Organization of
Petroleum Exporting Countries in Algeria next month.
Al-Falih’s
comments show that “Saudi Arabia is not interested for the time being in
coming to terms with the impact of low oil prices on producers’
economies,” said Abdulsamad al-Awadhi, a London-based analyst who served
as Kuwait’s representative to OPEC from 1980 to 2001. “To state that as
long as we have requests from customers for crude we will meet them at
any price shows a total disregard for others.”
‘Price War’
Brent
crude was trading $1.24 lower on Wednesday at $47.13 a barrel in London
a 4:11 p.m. local time. The international benchmark rose as high as
$115.71 a barrel in June 2014.
“There is no price war,” Al-Falih
said. Saudi Arabia isn’t threatened by competition in China, the world’s
largest energy consumer, and finds it “normal” for producers, including
neighboring Russia, to try to maximize their sales there, he said.
The
kingdom pumped 10.43 million barrels a day in July compared with a
record 10.57 million in the same month of 2015, data compiled by
Bloomberg show.
“Saudi Arabia will remain flexible in its
petroleum policy,” Al-Falih said. “We will meet demand if it rises as
was the case for this year and last year.”
Saudi Arabian Oil Co.,
known as Aramco, is negotiating for crude storage projects to help China
import more Saudi oil, Al-Falih said. It’s also pursuing refinery
ventures in China valued at more than $20 billion, he said. Aramco is in
advanced talks with China National Petroleum Corp. for two refineries
in Yunnan province and hopes to reach an agreement this year, he said.
Aramco also has a project with China Petroleum and Chemical Corp., known
as Sinopec, for a refinery in Qingdao, he said.
Nigeria's military said on Saturday it had launched a new offensive
against militants in the oil-producing Niger Delta, killing five and
arresting 23.
